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IFS: Treasury analysis on rental market is wrong

The independent Institute for Fiscal Studies has today warned that the Treasury’s budget analysis on the rental market is “plain wrong”.

Speaking about the Chancellor’s decision to restrict mortgage interest relief to the basic rate for landlords, IFS director Paul Johnson said: “At present if you own a property which you let out to tenants you can set any mortgage interest costs against tax due on rent received.

“The Budget red book states that this means that “the current tax system supports landlords over and above ordinary homeowners” and that it “puts investing in a rental property at an advantage.

“This line of argument is plain wrong.

“Rental property is taxed more heavily than owner occupied property. There is a big problem in the property market making it difficult for young people to buy, and pushing up rents. The problem is a lack of supply. This change will not solve that problem.”

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    Hurrah, some sense at last!

  • Rob  Davies

    Not really.

    "There is a big problem in the property market making it difficult for young people to buy, and pushing up rents. The problem is a lack of supply."

    Yes, because the supply that does exist is being hoovered up by landlords. And that's because it's easier to get a BTL mortgage than it is for young first-time buyers to get a mortgage. Rental properties might be taxed more than owner-occupied properties, but they're a lot easier to acquire in the first place. That has to change. Why does someone need 50 or 60 properties when young people have given up on owning all together?

    It's not the fault of landlords that the supply situation in this country is so dire, but this poor me narrative from landlords is a little bit tedious, to be honest. Why do you become a private landlord in the place? To make money, surely? So you will seek to protect that profit by any means. I'm sure many landlords do treat their tenants well, but there are also many who don't. Landlords don't seem willing to accept this and get very defensive against criticism, a bit like estate agents.

    It should be easier to buy a home than buying a home purely to let. That's not the case at the moment. I don't trust Osborne to change a thing, but that seems to be what he is trying to do.

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    I wouldn't object if it meant I could get a mortgage at the same rate homeowners do but Buy to Let interest rates are much higher. Don't hit us each and every way as we are running a business and soon it will not be profitable. May as well sell up and move abroad. Or be fortunate to have a Council house that I could sell for a £1m after buying from the taxpayers for £50 000.


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